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What Is NEM 3.0?

In California, you probably know about the NEM 2.0 initiative. But maybe you didn’t give much attention to it. Hence, this new NEM 3.0 is making a big ruckus, and for a good reason. So, what is NEM 3.0? Keep reading to find out.  

The NEM 3.0 is the latest system by which the billing credit system is being changed under the California Public Utilities Commission. As the solar panels generate excess kW/hr power, they will export it back to one of the utilities in California. Hence, this will give users a discount on their monthly electricity bills through credits.

As efficient as NEM 3.0 sounds, knowing some of its drawbacks is important. Furthermore, you should know what to do in this situation. So, stick around till the end!

The Major Changes In NEM 3.0

The overall changes in NEM 3.0 are pretty drastic compared to NEM 2.0. As such, most of the changes are against the implementation of solar panels. Also, the billing system and credit rate changes are making things more difficult. So, here is the vital gist of NEM 3.0.

Poor New Special Rates Plan

CPUC is introducing a new unique rate plan: the ”Time of Use’’ rate. This plan charges you higher rates when energy consumption is high and vice-versa. So, that’ll make you turn off your solar panels during peak energy periods.

Also, the new proposed directive allows the three primary power utility services to adjust their high voltage rates at their will. And the three principal utilities in California are Pacific Gas & Electric, San Diego Gas & Electric, and Southern California Edison.

Hefty Reductions In Energy Credits

The new proposal of NEM 3.0 calls for a new calculating system called the Avoided Cost Calculator (ACC). This calculator uses a complex model to generate hourly and monthly rates. It does this for all three utility services in California.

So, the mix of the new ToU rates with the ACC reduces the overall credit on your monthly bills. To see how critical it is, think of NEM 2.0. You could save about 20 to 35 cents for every kilowatt-hour in that system. But in NEM 3.0, it has come down to only 4.6 to 5.7 cents. 

Weak Temporary Motivators

Even the CPUC understands the drastic measures they are taking. Hence, they are creating incentives that might help with market transition credits (MTC). Therefore, these credits will allow you to pay small monthly installments on two of the three utilities.

So, if you’re a low-income guy, you can have higher savings in PG&E and SCE utilities. Furthermore, you won’t have to pay an additional 8 dollars per Kilowatt solar panel you implement. But these incentives are weak compared to the losses you’ll receive.

Things You Need To Do Right Now

As of now, NEM 3.0 is being revised and not yet imposed. Hence, now is the perfect time for you to take action. You can do two things. Firstly, you can get yourself a solar panel. Store electricity and use it when consumption is high. So, this will save on the overall electricity bill, especially at night.

Secondly, you need to get into the NEM 2.0 program. Though they might reduce the duration from 20 to 15 years, the overall structure and deal are better. And one final thing you can do is wait for NEM 3.0, but that is not recommended. Because the future estimates are rough, hopefully, you will make the proper decision.


Hence, now you know what is NEM 3.0. In short, it is a credit system that is on hold for now because of various factors. These factors are weak special rates, poor motivators, and subpar credits. So, thank you very much for reading till the end. Think hard, stay safe and support clean energy.

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